B2 B CHAPTER 11 - BA 303 sup
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ObjectivesObjectivesObjectivesObjectives
Challenges in New Product Challenges in New Product Development (NPD)Development (NPD)
Organizational Structure & NPDOrganizational Structure & NPD Stages & Management of NPDStages & Management of NPD Diffusion & Adaption of New ProductsDiffusion & Adaption of New Products
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Why New Products FailWhy New Products FailWhy New Products FailWhy New Products Fail
Poor Product PositioningPoor Product Positioning Vague Consumer DifferenceVague Consumer Difference ““Over Championing”Over Championing” Overestimated DemandOverestimated Demand Poor DesignPoor Design Poor Marketing ExecutionPoor Marketing Execution High Development CostsHigh Development Costs Strong Competitive ReactionStrong Competitive Reaction Remember the 20 clues to NPSRemember the 20 clues to NPS
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Challenges in NPDChallenges in NPDChallenges in NPDChallenges in NPD
Idea ShortageIdea Shortage Fragmented MarketsFragmented Markets Social & Governmental ConstraintsSocial & Governmental Constraints CostCost Capital ShortageCapital Shortage Need for SpeedNeed for Speed Shorter Product Life CyclesShorter Product Life Cycles
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New Product Development New Product Development ProcessProcess
New Product Development New Product Development ProcessProcess
IdeaIdeaGenerationGeneration
ConceptConceptDevelopmentDevelopmentand Testingand Testing
IdeaIdeaScreeningScreening
BusinessBusinessAnalysisAnalysis
ProductProductDevelopmentDevelopment
MarketMarketTestingTesting
CommercializationCommercialization
MarketingMarketingStrategyStrategy
DevelopmentDevelopment(sometimes (sometimes concurrent concurrent
with product with product development)development)
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Sales & Profit Life CyclesSales & Profit Life CyclesSales & Profit Life CyclesSales & Profit Life Cycles
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
TimeTimeSal
esS
ales
&
& p
rofi
tsp
rofi
ts (
$) (
$)
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20%20% Probability of Success Probability of Success20%20% Probability of Success Probability of Success
ProbabilityProbabilityof technicalof technicalcompletioncompletion
OverallOverallprobabilityprobabilityof successof success ==
Probability ofProbability ofcommercializationcommercialization
given technicalgiven technicalcompletioncompletion
XXProbability ofProbability of
economiceconomicsuccess givensuccess given
commercializationcommercializationXX
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EXPLORE FIRST, EXPLORE FIRST, INNOVATION TEAM- SESSIONINNOVATION TEAM- SESSION
EXPLORE FIRST, EXPLORE FIRST, INNOVATION TEAM- SESSIONINNOVATION TEAM- SESSION
ACUMENACUMEN
SUCCESSFULSUCCESSFUL
NEW PRODUCTSNEW PRODUCTS ==
CREATIVITYCREATIVITY ++
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IDEASIDEAS EXPLORE FIRST, EXPLORE FIRST, INNOVATION TEAM- SESSIONINNOVATION TEAM- SESSION
IDEASIDEAS EXPLORE FIRST, EXPLORE FIRST, INNOVATION TEAM- SESSIONINNOVATION TEAM- SESSION
A’S & B’S NO C’S OR D’SDECISION MAKERSDRIVERFACILITATORNO LAME DUCKSNO NOMINAL TITLE HOLDERSINSIDER V OUTSIDER
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IDEASIDEAS EXPLORE FIRST, EXPLORE FIRST, INNOVATION TEAM- SESSIONINNOVATION TEAM- SESSION
IDEASIDEAS EXPLORE FIRST, EXPLORE FIRST, INNOVATION TEAM- SESSIONINNOVATION TEAM- SESSION
AWAY FROM CAMPUSROUND TABLEAUDIO VISUALTAPE RECORD6-8 PLAYERS & POSITIONINGBETTER PART OF THE DAYEARLY IN THE MORNINGNEVER ON MONDAY
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IDEASIDEAS EXPLORE FIRST, EXPLORE FIRST, Explore- NO Rules
IDEASIDEAS EXPLORE FIRST, EXPLORE FIRST, Explore- NO Rules
No idea is a bad ideaBe creativeTake risks No criticism allowedJOHN HEFELY KNOWN ELEMENT A + KNOWN ELEMENT B
= NEW PRODUCT C =
ACUMEN + CREATIVITY
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DON’T SQUELCH CREATIVITYDON’T SQUELCH CREATIVITY, ,
Explore- NO Rules
DON’T SQUELCH CREATIVITYDON’T SQUELCH CREATIVITY, ,
Explore- NO Rules
THOMAS EDISONCHRISTOPHER COLUMBUSHENRY FORDSTATE HOSPITAL ON ARSENAL ST.NATIONAL ACADEMY OF SCIENCEADMIRAL HULSEYJOHN HEFELY KNOWN ELEMENT A + KNOWN ELEMENT B
= NEW PRODUCT C
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Concept Development & Concept Development & TestingTesting
Concept Development & Concept Development & TestingTesting
1. Develop Product Ideas into Alternative Product Concepts
1. Develop Product Ideas into Alternative Product Concepts
2. Concept Testing - Test the ProductConcepts with Groups of Target Customers
2. Concept Testing - Test the ProductConcepts with Groups of Target Customers
3. Choose the Best One3. Choose the Best One
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Consumer-Goods Market Consumer-Goods Market TestingTesting
Consumer-Goods Market Consumer-Goods Market TestingTesting
Sales-Wave
ResearchTest offering trail to
a sample of consumers in
successiveperiods.
Sales-Wave
ResearchTest offering trail to
a sample of consumers in
successiveperiods.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
StandardTest Market
Water Baby St. Louis
Full marketing campaignin a small number of representative cities.
StandardTest Market
Water Baby St. Louis
Full marketing campaignin a small number of representative cities.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
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CommercializationCommercialization(Introductory Life Cycle)(Introductory Life Cycle)
CommercializationCommercialization(Introductory Life Cycle)(Introductory Life Cycle)
When
Where
Whom
ProductPricePlacePromotionPolitics
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2 1/2%Innovators
13 1/2%*Early
adopters
34%Early
majority
34%Late
majority
16%Laggards
Time (speed) of adoption, diffusion, innovations *opinion leader Remember our chapter 3 -• OPTHALMOLIC (EYE) EXAMPLE
Adopter Categorization of the Basis of Adopter Categorization of the Basis of Relative Time of Adoption of InnovationsRelative Time of Adoption of Innovations
Adopter Categorization of the Basis of Adopter Categorization of the Basis of Relative Time of Adoption of InnovationsRelative Time of Adoption of Innovations
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Characteristics of the Characteristics of the Innovation Rate of AdoptionInnovation Rate of Adoption
Characteristics of the Characteristics of the Innovation Rate of AdoptionInnovation Rate of Adoption
Relative advantageRelative advantage CompatibilityCompatibility ComplexityComplexity DivisibilityDivisibility CommunicabilityCommunicability
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Remember B2B Product Remember B2B Product POSITIONINGPOSITIONING
Remember B2B Product Remember B2B Product POSITIONINGPOSITIONING
PositioningPositioning is the act of is the act of designing the company’s designing the company’s offering and image to occupy offering and image to occupy a distinctive place in the the a distinctive place in the the target market’s mind.target market’s mind.
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Remember B2B COMPETIITIVE Remember B2B COMPETIITIVE ADVANTAGE: ADVANTAGE: SOURCE, SOURCE, POSITION, OUTCOMESPOSITION, OUTCOMES
AND REINVESTAND REINVEST
Remember B2B COMPETIITIVE Remember B2B COMPETIITIVE ADVANTAGE: ADVANTAGE: SOURCE, SOURCE, POSITION, OUTCOMESPOSITION, OUTCOMES
AND REINVESTAND REINVEST
US AEROSPACE AND US AEROSPACE AND BOEING EXAMPLESBOEING EXAMPLES
UNDERSTANDING CORE UNDERSTANDING CORE COMPETENCIESCOMPETENCIES
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Sales & Profit Life CyclesSales & Profit Life CyclesSales & Profit Life CyclesSales & Profit Life Cycles
*Introduction*Introduction GrowthGrowth MaturityMaturity DeclineDecline
TimeTime*Corresponds with full commercialization*Corresponds with full commercialization(NPD)(NPD)
Sal
esS
ales
&
& p
rofi
tsp
rofi
ts (
$) (
$)
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Four IntroductoryFour IntroductoryMarketing StrategiesMarketing Strategies
Four IntroductoryFour IntroductoryMarketing StrategiesMarketing Strategies
Rapid-Rapid-skimmingskimmingstrategystrategy
Rapid-Rapid-skimmingskimmingstrategystrategy
Rapid-Rapid-penetrationpenetration
strategystrategy
Rapid-Rapid-penetrationpenetration
strategystrategy
Slow-Slow-penetrationpenetration
strategystrategy
Slow-Slow-penetrationpenetration
strategystrategy
Slow-Slow-skimmingskimmingstrategystrategy
Slow-Slow-skimmingskimmingstrategystrategy
PricePrice
LowLow
HighHigh
PromotionPromotionHighHigh LowLow
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Maturity StageMaturity StageMaturity StageMaturity Stage
Market ModificationMarket Modification Product ModificationProduct Modification Marketing-Mix ModificationMarketing-Mix Modification
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Decline StageDecline StageDecline StageDecline Stage
Increase investmentIncrease investment Resolve uncertainties - stable Resolve uncertainties - stable
investmentinvestment Selective nichesSelective niches HarvestingHarvesting DivestingDivesting
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Market EvolutionMarket EvolutionMarket EvolutionMarket Evolution
EmergenceEmergence GrowthGrowth MaturityMaturity DeclineDecline
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ReviewReviewReviewReview
Challenges in New Product Challenges in New Product Development (NPD)Development (NPD)
Organizational Structure & NPDOrganizational Structure & NPD Stages & Management of NPDStages & Management of NPD Diffusion & Adaption of New ProductsDiffusion & Adaption of New Products